While the S&P 500 index has gained nearly 25% in the past 12 months, online auction and retail site eBay Inc. (NASDAQ: EBAY) shares have gained a mere 0.5%. Over 24 months, the stock has increased in value by about 70% while the S&P is up about 45%. In the five years since the financial crisis of 2008, eBay’s stock is up more than 250%, compared with a 100% rise in the S&P 500.

Most of that gain came in 2012, when the share price rose from around $31 to near $51, not far below where the stock trades today.

Looking at the numbers, eBay’s price-to-earnings (P/E) ratio for the trailing 12 months is just short of 25, and its forward P/E ratio is less than 17. The company’s market cap is around $68 billion.

It could be that eBay is just a hard company to put a value on. Most of us think of it as an online auction site, but that has become a less important part of the company’s business as it focuses these days on immediate sales, which now account for about 70% of transactions, according to a report in Barron’s. That puts eBay in almost direct competition with Amazon.com Inc. (NASDAQ: AMZN), and eBay has responded by adding Amazon-like offers such as free shipping.

The consensus price target on eBay stock is about $62, which implies an upside of about 20% for the stock, compared with a 5% upside for Amazon’s stock. Amazon’s trailing 12-month P/E ratio is more than 1,400, and its forward multiple is 146. Amazon is practically the definition of a momentum stock, where top line growth is about the only thing that matters.

Neither eBay nor Amazon pays a dividend, and that could be one thing that eBay does to boost its share price. The company is sitting on about $5.2 billion in cash and equivalents, and another nearly $5 billion in short-term investments. Last quarter’s free cash flow totaled just more than $1 billion, and with about 1.3 billion shares outstanding, a quarterly dividend of say $0.25 might gin up more interest in the stock.

Competing with Amazon has not proven to be a winning strategy for any company, and that could have something to do with eBay’s lackluster performance this past year. Paying a dividend means that eBay will have less cash to continue to butt heads with Amazon if the competitive heat should increase, and it is a good bet that the heat will rise if Amazon thinks it is about to get scorched.

Essentially, eBay’s assault on Amazon has to be “this far and no farther.” One way we will know where that point is will be when eBay announces a dividend. We have said before that eBay could easily afford a 2% yield and still maintain a nice pile of cash for a rainy day. We still believe that is true, and 2014 may be the moment.

eBay shares were trading up about 2.5% in the first hour of trading Monday, at $52.86 in a 52-week range of $48.06 to $58.04.

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